Thursday September 27, 2012
10 steps toward affordable housing
By P. Gunasegaram
Itís a complex problem which requires delicate yet decisive handling.
FOR too long, Malaysia has not had a pragmatic policy to deal with the issue of housing for the masses, which includes affordable housing for those who are relatively better off and low-cost housing for the poor.
The problem is a big one and particularly difficult.
Up to now, no satisfactory solution has been found. Low-cost houses are defined as those costing below RM42,000 while affordable housing costs between RM85,000 and RM300,000.
A good housing policy enables most people to have access to decent housing, which should be taken to mean housing with basic facilities in surroundings which are adequate and safe for human habitation and interaction.
There are several dimensions to this. If people are to be able to afford nice homes, they need adequate income.
That means proper housing cannot be divorced from the question of increasing incomes for all and must go hand in hand with that.
At the same time, if everything is left to the free market and to the whims of property developers, then there is going to be little development in this area which carries low margins.
The less affluent, who constitute most of the population, will be marginalised and those who have much more than others will accumulate property far in excess of their needs.
There needs to be control and regulations which are scrupulously enforced.
The Government now seems to be serious about doing something. And if it is, then it has to make several hard decisions.
There are already in place a number of housing programmes and these will no doubt be given a boost in the Budget to be unveiled tomorrow.
Here are our 10 steps towards low-cost and affordable housing and some of them are quite onerous. Others are probably already in contemplation and implementation stage but these steps must be the minimum that need to be taken to ameliorate and eventually solve the problem once and for all.
1. Set up a housing authority for this specific purpose. The 1Malaysia People Housing Programme or PR1MA has been set up for part of this purpose. But as it is currently constituted, its role is limited. You need one overall authority which will handle all forms of housing for the masses Ė that essentially means both low-cost and affordable housing under one roof. Without that, efforts are going to be piecemeal and not integrated.
2. Get the best brains to helm this authority. This is a tough problem and a very important one as it affects the well-being of most people in the country. It requires people of exceptional ability with impeccable integrity who will handle a wide-ranging array of powers to get to the root cause and get things moving. Someone with wide experience in the property sector and who now wants to move to public service would be an ideal choice.
3. The authority must be professionally and independently run. While a set of policies should be given, it must be completely above politics. The aim should be to provide affordable housing and nothing else.
4. It must run the projects by itself. Handing it over to developers just introduces another layer of profits and raises costs. That does not mean that there should be no subcontracting. Developers who have low-cost and affordable housing as part of their development should put their stock through the overall housing authority so that verification can be made of the buyersí status.
5. Land must be acquired on a systematic basis. Both the federal and state government should allocate land for this purpose. Further, every large development should require an appropriate mix of low-cost, affordable and luxury development.
6. The authority must place rigid strictures on resale of property. Such sales must be made only back to the authority and if sale is within, say, five years, purchasers should not be able to reap a huge gain. That will mean a tightly controlled market for properties in this sector so that prices are kept as low as possible.
7. It must have an impeccable system of vetting applicants. Those who do not deserve it must not be allowed to get on board the scheme. Each applicantís financial background must be thoroughly investigated before it is approved. Computerise as much as possible and link it with the various authorities. Even bank accounts should not be sacrosanct.
8. Reduce discretionary power. Criteria should be clearly set and once a person meets the criteria, he should be automatically eligible. If there are more applicants than units for a particular project, then selection should be made by public balloting.
9. Forget racial quotas which inevitably leads to politicisation. If some races are poorer than others, it will be automatically reflected when the criteria for eligibility are evaluated. That will avoid further division among Malaysians.
10. Do proper market research. The last thing we need is to have a surfeit of low-cost and affordable housing with insufficient takers. Needs and affordability have to be carefully studied and analysed to ensure the final product meets with market demand.
One of the greatest success stories anywhere for the provision of affordable, decent housing for its populace must be land-starved Singapore. Basically, it involved the evolution of a two-tier pricing system, one with strict controls for government-sponsored projects and another free-market priced system for the private sector.
While there is lot that can be learned from Singaporeís Housing Development Board and its system of HDB flats, one must be careful to learn from its mistakes as well.
Unrestricted access of foreigners to its property markets has resulted in a yawning chasm between private and government projects, leading Singaporeans to charge that they have been dispossessed in their own land.
Thatís one of most major complaints of Singaporeans in what has been otherwise one of the greatest success stories of economic development, raising incomes and improvement of the quality of life in the world.
Itís a danger sometimes to keep the best for only those who can afford it. It is going to be quite a challenge to mix up low-cost and affordable housing within proximity of exclusive areas so that the population does not get alienated from each other.
There is, however, one truth that we cannot run away from. There is limited supply of land and it does not increase. But the population does and inevitably land prices are always going to rise.
If we donít solve this problem of allocating an increasingly scarce resource fairly, there is going to be a major problem. At the end of the day, increasing incomes and reducing the gap between the rich and the poor is what will do most for affordable housing.
> P. Gunasegaram is an independent consultant and writer.